Nine Arrested in Workers’ Comp Fraud : Insurance: State officials say the action is the start of a major assault on the problem. Fraud has been driving up employers’ costs.

In what was touted as the launch of a major attack on workers’ compensation insurance fraud, the California Insurance Department and the Los Angeles district attorney’s office Wednesday announced the arrests of nine people allegedly involved in filing phony insurance claims.

Some insurance industry observers said they were surprised that a Los Angeles press conference was called even though none of those charged is considered a major player in the state’s growing workers’ compensation fraud problem. But prosecutors said they are building cases against more serious offenders.

The arrests this week were made under a 3 1/2-month-old state law providing for stepped up investigations of suspected workers’ compensation fraud and stiffer penalties on those convicted.

The action also follows growing demands by major California business interests for a crackdown on fraud and other factors rapidly driving up the cost of workers’ compensation insurance for employers in the state.

“California employers today pay among the highest workers’ compensation rates in the nation, in part because medical practitioners, attorneys and individuals are conspiring to exploit the system,” state Insurance Commissioner John Garamendi said at a midday news conference.

He said the criminal charges will send “a clear warning to con artists that we aim to put them out of business.”

Those arrested include a 44-year-old orthopedic surgeon from Santa Ana, Marappa V. Gopinath. He was indicted by a grand jury Tuesday on three counts of insurance fraud and one count of conspiracy.

Prosecutors said he double-billed two insurance companies and provided false information for a workers’ compensation patient. On one medical report, Gopinath allegedly attributed the patient’s back injury exclusively to work done for one former employer. On a second report, he allegedly attributed the problem to work done for another employer. Gopinath, who could not be reached for comment, was released Wednesday on his own recognizance.

The patient, Richard Moreno, 57, of Huntington Beach, was indicted on the same charges. A warrant was issued for his arrest, but as of late Wednesday authorities had not located him.

Also arrested were two office assistants at a Los Angeles medical-legal clinic that handles workers’ compensation cases and three street-corner pitchmen believed to be working for the same clinic.

No charges were filed against the owners of the clinic, Bufete Medico Legal on West Olympic Boulevard. But prosecutors said they are investigating the firm, which they maintain may handle as much as $100 million a year in bogus claims.

The others arrested in this week’s anti-fraud sweeps were three workers who allegedly submitted false insurance claims.

Thomas Hagerman, co-founder of the Independent Business Coalition Against Workers’ Compensation Fraud, praised authorities for calling workers’ comp fraud “a major, major reason why jobs are being forced out of the state.”

Still, some insurance industry observers were unimpressed.

“Cappers (street-corner pitchmen) and clerks are a dime a dozen, and they will be replaced tomorrow,” said William P. Molmen, general counsel for the California Workers’ Compensation Institute, a trade group.

Moreover, Molmen contended that fraud reflects a broader problem--the lack of cost controls on medical services provided under workers’ compensation.

For their part, prosecutors called fraud a major issue and said they eventually will catch the kingpins.

“You start at the lowest end of the food chain, and you work your way up,” said Ira Reiner, Los Angeles district attorney.